The member nations of the Gulf Cooperation Council (GCC) will face the worst economic crisis in their history, warns the Institute of International Finance (IIF).
According to the IIF, this is attributed to the coronavirus pandemic and the depleting oil prices.
IIF further stated that the GDP of the GCC nations will contract by 4.4 percent this year,. Oman is expected to suffer the worst contraction of 5.3 among the six GCC countries, even though there have been indications that the virus spread has been successfully contained.
In its reports, the IIF said, “Shocked by COVID-19 and the plunge in oil prices, the six GCC states will experience their worst recession in history. The depth of the contraction for this year and the speed of the expected recovery in 2021 is subject to a high degree of uncertainty. Growth could resume in 2021, supported by the partial easing in oil production cuts and a gradual pick-up in private sector non-oil activity.”
It further said in its report, “Brent oil prices are expected to remain in a range of $40-$50 a barrel over the medium term, well below the fiscal breakeven oil prices for the six GCC states. Under such prolonged oil prices, the deficits could remain large despite continued fiscal adjustment.”
“Saudi Arabia, Kuwait, Qatar, and the UAE, with large public foreign assets, are better placed to accommodate large deficits than Bahrain and Oman. While Bahrain can count on financial aid from its neighbors as a cushion against external pressure, Oman is emerging as an increasingly vulnerable spot in the region in light of its mounting debt.”